Utility Trailers and Recreational Vehicle Rental

SIC 7519

Industry report:

This category covers establishments primarily engaged in daily or extended-term rental of utility trailers and recreational vehicles (RVs). Establishments primarily engaged in renting motorcycles, bicycles, golf carts, go-carts, or recreational boats are classified in SIC 7999: Amusement and Recreation Services, Not Elsewhere Classified, and those engaged in renting airplanes are classified in SIC 7359: Equipment Rental and Leasing, Not Elsewhere Classified. Establishments primarily engaged in the rental of mobile homes on site are classified in Real Estate, SIC 6515: Operators of Residential Mobile Homes Sites.

Industry Snapshot

The utility trailer and recreational vehicle (RV) rental industry comprises two distinct operations. Utility trailers generally are rented by establishments that also rent trucks for the consumer market, such as industry leader U-Haul International. Most of those establishments are automotive service centers or centers affiliated with a major truck rental company. Recreational vehicles (RVs) generally are rented by establishments that focus exclusively on renting RVs for the vacation market or by RV dealers for whom the rental market is a sideline to RV sales and service. Some establishments rent utility trailers and camper-trailers, considered the low-end of the RV rental business. According to the U.S. Census Bureau, 5,774 establishments operated in this industry in 2010. Businesses in this industry rented utility trailers, recreational vehicles, or both. Minor categories included businesses that rent mobile homes (except on site), pop-up campers, recreational buses, and mobile offices and commercial units. In 2010 the industry employed 208,363 people, and total industry revenues reached $13.4 billion.

Most of the larger establishments renting recreational vehicles belong to the Recreation Vehicle Rental Association (RVRA), a division of the Recreation Vehicle Dealers Association (RVDA). According to the RVRA, RV rentals were on the increase at the end of the first decade of the 2000s, and most dealers were showing positive gains, even as sales slowed due to an economic recession and volatile fuel prices. The Recreational Vehicle Industry Association (RVIA) was another large trade organization that supported the industry. These associations promoted the RV as one of the most economical ways to vacation, especially with a family.

Background and Development

L. S. Schoen, the founder of U-Haul International, generally is credited with turning the haphazard rental of utility trailers into an organized industry. In 1945 Schoen, then in the military, rented a beat-up trailer from a service station to move his family's belongings from Los Angeles to Corona, California. That night he made an entry in is his diary that read: "I am intrigued by the business potential of this idea especially from the standpoint of one-way rentals."

Schoen was discharged from the military later that year and moved his family to Portland, Oregon. Within two weeks he had bought his first trailer. He painted "U-Haul Co.--Rental Trailers--$2.00 per day" on the sides. By 1946 Schoen had a fleet of 70 trailers from Seattle to Los Angeles, and in 1948 he decided to go national. He offered one-way rentals from the West Coast to anywhere in the United States. The only catch was that customers had to find service station managers at the end of their trips who were willing to become Schoen's agents. The plan worked, and by the end of the year, Schoen had a fleet of 200 trailers and a network of agents nationwide.

In 1951 Schoen launched a low-risk program for independent fleet ownership as a way to raise money and expand the U-Haul network even faster with investors buying trailers from U-Haul and assuming full responsibility for insurance, maintenance, and distribution. Each month, fleet owners would receive a report and payment for rental activity on their trailers. Schoen raised $2 million in the first two years. By 1955 there were more than 10,000 U-Haul trailers in 200 fleets around the country, and Schoen was adding 600 trailers a month.

In the late 1960s, U-Haul trailers were available at more than 14,000 service stations. Although the number of outlets declined during the 1970s, when many service stations closed, U-Haul remained the leader in utility trailer rentals. U-Haul had started renting trucks in the late 1950s and came to dominate the consumer truck-rental industry as well. For 1997 U-Haul had revenues of $1.2 billion. AMERCO became the holding company of U-Haul International in 1997.

In 1999 U-Haul rented its trailers, trucks, and tow dollies through 1,100 company-owned centers and 15,000 dealers in the United States and Canada, and sales topped $1.5 billion. This was not enough to top industry leader Ryder System, Inc., who had 1999 sales of $5 billion. Penske Truck Leasing placed second with 1998 sales of $1.8 billion. Other utility trailer rental companies included Transamerica Leasing Inc., which had 1997 sales of $734 million, and XTRA Lease Inc., which had 1998 sales of $300 million.

Recreational vehicles became widely popular in the United States during the 1960s, and in 1970 RV dealers formed the Recreation Vehicle Dealers Association (RVDA). The RVDA worked to enhance the image of RV dealers and to improve warranty programs offered by RV manufacturers. By 1982 RV rentals had emerged as a separate industry, which led to the formation of the Recreation Vehicle Rental Association (RVRA). The group later became a division of the RVDA. In 1988 the RVRA began publishing Rental Ventures a consumer guide to renting recreational vehicles. That was followed in 1991 by the Rental Operations Manual, which provided guidelines and marketing suggestions for RV rental dealers.

In the late 1990s, baby boomers, who liked to rent or lease all types of products, were boosting demand for RV rentals and causing the traditional rental season to lengthen. Their most common rental choice was a Class C RV, or mini-motor home.

In 2002 the U.S. Census Bureau reported 6,389 establishments engaged in truck, utility trailer, and RV rental and leasing that generated combined revenues of approximately $13.6 billion. There were 54,000 employees within the industry who shared $1.8 billion in annual payroll. In 2003 the utility trailer and RV rental and leasing industry generated revenues of more than $12.4 billion, down 1.1 percent over 2002. In 2004 there were 2,360 establishments in the utility trailer and RV rental and leasing industry employing some 10,451 people. Trailer rental represented the largest sector of the industry with 869 establishments, or 36.8 percent of the market. Combined, they generated revenues of more than $674 million. Utility trailer rental accounted for 414 establishments, as well as 17.5 percent of the market and industry revenues of $120 million. Mobile home rental, except on site, dominated 15.6 percent of the market with $65 million in revenues. RV rental generated more than $106 million, with 11.5 percent of market share. Together, industry revenues totaled more than $1.19 million.

According to a survey conducted by the RVRA, RV rentals increased an average of 24 percent in 2004, 36 percent in 2005, and 24 percent in 2006. Fleet owners planned to continue to expand their fleets 14 percent at the end of the first decade of the 2000s. The Class C RV remained the most rented RV, followed closely by the towable RV (folding camping trailers/travel trailers). Rentals of small units were increasing faster than average, due to lower fuel costs.

The vast majority of the establishments in this industry in the first decade of the 2000s were small operations with fewer than five employees. Nonetheless, the industry reported healthy 2006 revenues of more than $1.1 billion. Daily rental prices averaged between $150 and $200 per day, with mileage also added. More than 64 percent of renters reported that they rented for more than 10 months during the course of a year, and 8 percent of rentals came from international visitors. Demand continued to rise, spurred by such promotions as tie-ins to the 2006 DVD release of the Robin Williams movie, "RV."

As the economy fell into a recession at the end of the first decade of the 2000s and the housing market collapsed, the two main segments of this industry were affected differently. Whereas the RV rental segment actually found some benefits in consumers' desire to vacation on a limited budget, trailer rental firms, such as U-Haul, suffered negative effects of a collapsed housing market. Earnings from the company's moving operations in fiscal 2009 was $112.1 million, down significantly from $193 million and $217.9 million in fiscal 2008 and fiscal 2007, respectively. The downturn in business was also pushing prices down as the top three firms in the sector--U-Haul, Ryder, and Penske--competed for a smaller customer base.

While firms that rented trailers were riding out the economy, businesses that specialized in renting RVs benefited from Americans' desire to limit vacation spending. During the busiest season--from mid-June to mid-August--some rental firms reported substantial increases in bookings. However, the number of European travelers, which accounted for up to 30 percent of some dealers' business, was down, leading to a highly competitive environment and subsequent price declines. Overall, it appeared that RV renting was increasing in popularity. In March 2009, online classified Web site RVT.com partnered with GetRV.com to add a RV rental search engine. Consumers who searched the site were linked to available rental units in their local area.

Current Conditions

The outlook for the truck and utility trailer rental industry in the early 2010s was positive, as the economy began to recover from the recession at the end of the prior decade. According to U-Haul International, of the 312 million people that lived in the United States in 2012, between 40 million and 50 million were likely to move during the year, three-quarters of whom would be do-it-yourselfers. A report by IBISWorld also predicted an uptick in moving activity, stating that "as the residential housing market improves � demand for truck rentals will revive." The research firm valued the truck rental industry overall at $16 billion in 2012.

Activity in the RV rental industry was also on the upswing, as consumers regained the disposable income they needed to take vacations. Although rising fuel prices were a concern for the industry, the RVIA noted that research revealed, "When fuel prices rise, RVers adjust by traveling to destinations closer to home, driving fewer miles, and staying longer in one place." The organization also pointed out in 2011 that "Fuel prices would need to more than double from their current level [$3.39 per gallon] to make RVing more expensive for a family of four than other forms of travel." As a result, at the beginning of the 2010s, a profitable future was expected for RV rental companies.

Industry Leaders

The largest RV rental establishment in the early 2010s was Cruise America of Mesa, Arizona, with 20 company-owned and 120 dealer facilities in the United States. The company had a fleet of more than 3,000 vehicles, including self-contained RVs, motor homes, camper homes, truck campers, and motorcycles. More than half of its customers were from outside the United States. Cruise America's revenues exceeded $17 million in 2011. The firm also sold RVs through its RV Depot dealerships.

While the utility trailer rental segment was highly competitive, one of the top leaders was Ryder System, Inc., with sales of more than $6 billion in 2011. At that time, Ryder's total fleet comprised 148,000 vehicles. Penske Truck Leasing was another industry leader, with 2011 sales of $869.3 million. Penske rented 200,000 vehicles from 1,000 locations worldwide. AMERCO, U-Haul's holding company, filed for Chapter 11 bankruptcy protection in June 2003, from which it emerged in March 2004. U-Haul was not included in the filing, however, and generated $2 billion in 2009 sales. Unlike Ryder and Penske, which had substantial investments in commercial moving and storage, U-Haul targeted the do-it-yourself mover. As of 2012, U-Haul rented trailers through 15,000 independent dealers and 1,400 company-owned centers. The company employed more than 16,000 people and generated revenues of about $2.2 billion in 2011.

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